The EU's $5 Billion Fine Is Bad News for Google—but It's Not About the Money (GOOG really needs Chrome and search on your phone)
From Fortune:
Unlike Facebook, Google
has so far managed to stay out of the spotlight with respect to how it
capitalizes on data that people willingly—if unknowingly—give the
company. With European Union regulators’ $5 billion fine on Google for violating antitrust law, the respite may be coming to an end.
While this situation feels like a blast from the
past—reminiscent of U.S. regulators’ 1998 antitrust action against
Microsoft—the stakes now are quite different. On the surface, it appears
to be a dispute over anti-competitive behavior in the world of software
and hardware. But it is really about access to highly personal data,
and the very business model that underlies Google’s enormous
profitability.
In this case, the EU wants Google to stop requiring
smartphone manufacturers to preinstall its Chrome browser and to make
Google’s search engine the default. Regulators also want Google to cease
banning phone manufacturers from using unofficial, or “forked,”
versions of the Android mobile operating system. Google said in response
that “Android has created more choice for everyone, not less,” and that
the company would appeal the EU decision.
Google makes most of its money selling targeted ads, to the tune of a likely $60 billion in mobile advertising revenue just this year,
according to eMarketer. The critical word here is “targeted.” About 80%
of all smartphones produced today run Android, providing Google with a
massive user base. The more precise the information Google has about the
users of Android phones, the more precise its ads can be, and the more
advertisers will pay for them. For an advertiser, the most expensive
keywords are those that offer it the unique potential to target
customers with a high likelihood to stick with the brand for the rest of
their lives, such as those searching for phrases like “insurance.”
Google can make more than $50 from a single click on an insurance ad keyword.
Google’s deals with manufacturers give it an incredible amount of
access to user data. Google gives away its operating system for free,
which attracts manufacturers. It requires the manufacturers to
pre-install software such as its browser and search engine, which
attracts users. It also treats app developers well. And having lots of
apps and users attracts advertisers.
The more Google apps you have, the richer the picture Google’s algorithms can create of your likely interests....MORE
